Mirikizumab could be used by tens of thousands of patients if approved by the US Food and Drug Administration.
An application for ulcerative colitis could earn Eli Lilly $800 million in annual sales in the US alone.
Eli Lilly still looks like it could be a buy for growing investors.
Eli Lilly recently announced encouraging results for its drug candidate mirikizumab in the treatment of patients with moderately to severely active ulcerative colitis.
On February 18 he gave Eli Lilly (NYSE:MI) announced impressive results from its first Phase 3 clinical trial of mirkizumab in patients with moderately to severely active ulcerative colitis (UC) who have not responded to conventional therapies.
Eli Lilly also announced that data from the second study is expected to be published in the first half of 2022. With the pharmaceutical company set to file an application for approval of mirkizumab with the US Food and Drug Administration ( FDA) in the first half of this year, the question arises: could the approval of a UC application in the US lead to another blockbuster? for Eli Lilly?
Let’s look at the results of the first phase 3 clinical trial and the US UC market to answer this question.
An effective treatment for a potentially troublesome condition
UC is an inflammatory bowel disease (IBD) that causes damage to the gastrointestinal (GI) tract. The condition only affects the colon and rectum, unlike the other form of IBD, Crohn’s disease. Symptoms of UC, such as abdominal pain, weight loss, and fatigue, overlap with those of Crohn’s disease. However, the latter can affect any part of the gastrointestinal tract from the mouth to the anus.
Health professionals can determine the severity of UC by the number of bowel movements a patient has per day and whether the condition interferes with daily life. The severity of the disease is often classified as mild if the patient has fewer than five bowel movements per day and is able to adapt to the disease. A moderate to severe illness, on the other hand, involves up to 10 bowel movements per day and can interfere with going to work or school.
It is estimated that between 21% and 22% of the approximately 900,000 UC patients in the United States have moderate to severe disease activity each year. The good news is that mirikizumab can significantly improve the quality of life for many patients with moderate to severe UC.
Eli Lilly enrolled more than 1,000 patients with moderate to severe UC in its first phase 3 study who have never tried a biologic treatment or have not benefited from biologic therapies in the past. Patients who received mirikizumab achieved a much higher rate of symptomatic remission at week 12 than patients who received placebo. More specifically, 45.5% of patients treated with mirikizumab had resolution of symptoms at week 12, compared to 27.9% of patients receiving placebo at week 12.
The drug also had an exceptional safety profile. Only 2.8% of patients receiving mirikizumab reported serious adverse events, well below the 5.3% in the placebo group who reported serious adverse events during the clinical trial.
The app would be a huge boost for Eli Lilly
Based on data from the first phase 3 clinical trial, mirikizumab is an extremely safe and effective treatment for UC on the path to eventual FDA approval. But what does this mean for Eli Lilly’s sales?
There are approximately 200,000 patients with moderate to severe UC in the United States each year. Given the efficacy and safety profile of mirkizumab, I estimate that the drug may conservatively win over 8% of patients, or 16,000 patients. While the efficacy and safety profile of the drug are important selling points, there are numerous drugs on the market.
Although an annual list price for the drug will not be announced until after its possible launch, drugs like Humira could AbbVie (NYSE:SLT 0.39%) and Stelara von Johnson and Johnson (NYSE:BRK-A) (-1.11%) may be a good guide to mirikizumab’s annual list price. The first two drugs have annual list prices of around $80,000 and $150,000, respectively.
However, I expect mirikizumab to be offered at a lower annual price of $70,000 to compete in a crowded market. When I factor in insurance adjustments and patient assistance programs, I get a net annual cost of $50,000 per patient (probably mostly covered by insurance).
With an annual sales potential of $800 million, this would come close to blockbuster status. Even for a big pharmaceutical stock like Eli Lilly, that’s enough to guarantee good results. If approved, mirikizumab use at UC would add 3% to Eli Lilly’s projected 2022 sales of $25.9 billion.
Eli Lilly offers investors a broad portfolio
A potential UC application for mirikizumab alone is unlikely to propel Eli Lilly to blockbuster status. But since the drug is also in phase 3 clinical trials for Crohn’s disease, there’s a good chance it could become the company’s next blockbuster.
Even without this drug, Eli Lilly has a portfolio of dozens of compounds. These include the immune drug lebrikizumab, the potential diabetes blockbuster tirzepatide, and a host of other promising drugs. As a result, I believe Eli Lilly will deliver low-double-digit annual diluted earnings per share growth over the medium term.
With an expected price-earnings ratio of 29.6, Eli Lilly is a buy for long-term investors.
The article Could This Be Eli Lilly’s Next Blockbuster Drug? first appeared in The Motley Fool Germany.
This article represents the author’s opinion, which may differ from the “official” recommendation position of a premium Motley Fool advisory service. Questioning an investment thesis, including our own, helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
This article was written by Kody Kester and published on Fool.com on 03/19/2022. It has been translated so that our German readers can join the discussion.
The Motley Fool recommends Johnson & Johnson.
Motley Fool Germany 2022